The impact of technological development on environmental performance: an empirical analysis

This paper analyzes the impact of technological development on environmental performance using annual data on 88 developed and developing countries for the period 2002-2012. As a proxy for technological development, we use the Economic Complexity Index and we highlight that a country's productive structure is associated with the amount of knowledge and know-how embodied in its productive structure, which is a straightforward proxy-measure of the country's level of technology. We measure environmental performance by considering the recently developed Environmental Performance Index. We show that moving to higher levels of economic sophistication leads to better environmental performance showing that technological progress does not induce environmental degradation. However, the causal effect on air-quality is negative, i.e. exposure to PM2.5 and CO2 emissions increase. Our findings remain robust across alternative econometric specifications. Furthermore, we place the spotlight on the link between products' embodied technology/knowledge (sophistication) and environmental performance at the micro-level. We build two product-level indexes that attach a product to the average level of (a) environmental performance and (b) air-pollution (CO2 emissions) in the countries that export it. With these indexes, we illustrate how the development of more sophisticated products is associated with changes in the environmental quality and we show that economy's technological development captures information about the economy's level of pollution.

Authors: 
Athanasios Lapatinas, Eirini Boleti and Alexandra Kyriakou
Room: 
6
Date: 
Monday, September 24, 2018 - 18:00 to 18:15

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